In its analysis of the main political parties' manifestos, published today, the think-tank claims that Labour's proposals to extend the free entitlement represent a ‘significant’ new cost to public finances, while the benefit for children’s development and mothers’ employment is likely to be modest.
Labour is proposing to extend the 30 hours of free childcare to all three- and four-year-olds, as well as introduce a universal 15-hour offer to two-year-olds, which would start in 2020-21 and rise to 30 hours a week the following year. The party also wants to subsidise additional care over and above its proposed extended free entitlement, offer some free childcare for one-year-olds and extend maternity pay to 12 months in the longer term.
According to the IFS, the changes to the free entitlement would see at least 400,000 families with two-year-olds eligible for free childcare for the first time and would offer more free hours to another 1.6 million children. If the proposed subsidised hours are offered to all two- to- four-year-olds, two million families would be eligible for cheaper childcare.
However, it says that the costs of the policies are large. By 2021-22, Labour estimates that its childcare policies would require around £5.3 billion in extra funding – including additional spending on supporting new childcare places. This would increase spending on childcare by around 70 per cent over current projections, according to the think-tank.
The IFS goes on to say that costs could rise further in later years as the figures don’t include the costs of offering free or subsidised care to one-year-olds and of extending maternity pay. Even the costs of policies that are included – 30 hours for all two- to-four-year-olds and additional subsidised care – might not be fully captured by spending in 2021-22.
It adds that because take-up of the free hours is expected to rise for the first few years of the programme, the full running costs might not be felt until the middle of the next parliament.
For Labour to meet its pledge to deliver childcare in high-quality settings with a graduate-led workforce, the IFS says funding rates for the free entitlement would need to be increased since more qualified staff require higher wages.
Looking at the Liberal Democrats plans for childcare, the IFS finds that its proposal to increase the Early Years Pupil Premium (EYPP) is less generous than the higher funding rates Labour propose for the free entitlement.
The Lib Dems have said they would raise the EYPP to £1,000 per eligible child, up from £300 currently. The IFS says this works out to be £1.23 per hour in extra funding for disadvantaged children, a rise of about 25 per cent over current average funding rates. This is about half as generous as Labour’s proposed 50 per cent increase in funding rates.
The Liberal Democrats also want to extend the 15 free hours to all two-year-olds and to children aged nine to 24 months in working families. They have a long-term goal of 30 hours free childcare for two- to-four-year-olds and for younger children in working families.
The analysis does not mention the Conservatives' plans to introduce funding for schools to open nurseries.
Schools
The IFS analysis also examines the political parties' policies on schools. The Conservative, Labour and Liberal Democrat manifestos all commit to increase overall school spending over the next parliament.
It finds that once expected inflation and growth in the number of pupils is accounted for, Conservative plans imply a real-term fall in school spending of 2.8 per cent between 2017-18 and 2021-22, which makes for a total cut of 7 per cent between 2015-16 and 2021-22.
In contrast, Labour would increase school spending per pupil by 6 per cent compared with current levels and leave spending per pupil in 2021-22 1.6 per cent higher in real terms than its historic high in 2015-16. Lib Dem plans would protect spending per pupil in real terms at its 2017-18 level. All three parties would continue with school funding reform, but with additional protections to ensure no school loses out in absolute terms.
Luke Sibieta, an associate director at IFS and who carried out the analysis on school pledges, said, 'The commitments made by each of the main parties would imply quite different paths for school spending in the next parliament. Labour would increase spending per pupil by around 6 per cent after inflation over the course of the parliament, taking it to just above its previous historic high in 2015. Proposals from the Conservatives would lead to a near 3 per cent real-terms fall in spending per pupil over the parliament, taking it back to its 2010 level.'
Angela Rayner, Labour’s shadow education secretary, said, 'There is now no doubt about what Tory plans mean for education - our schools will see their budgets cut.
'And headteachers have warned us what the consequences will be for parents and pupils: fewer teachers, larger classes, a narrower curriculum, or even a shorter school week.
'The IFS analysis is clear: only Labour will give schools the resources they need to deliver a world-class education for the many, not just the few.'
Responding to the Education Policy Institute and IFS reports on school spending, schools minister Nick Gibb said, 'Jeremy Corbyn can’t deliver any of his promises on school spending – this analysis shows his numbers categorically do not add up and he is too much of a shambles to negotiate a Brexit deal that works for Britain.
'Only Theresa May can provide the strong and stable leadership our country needs through Brexit – so we protect the economy and are able to fund our schools to educate our children. We will increase the overall schools budget by £4 billion by 2022 – a real terms rise for every year of the Parliament compared to current spending plans – and ensure that no school has its budget cut as a result of a fair funding formula.'
